A recent LinkedIn post by Corey Geiger, Economist & Author, caught my attention, highlighting a significant shift in the U.S. dairy industry—milk production is no longer the primary metric for growth; instead, milk components such as butterfat and protein are driving progress. This shift challenges conventional wisdom, particularly in India, where total milk production remains the dominant benchmark for success.
It prompted me to explore a crucial question: How does India compare, and is it time for a similar transition?
The U.S. Dairy Industry: Quality over Quantity
In the United States, the dairy industry has moved beyond total milk volume as its primary benchmark for growth. As highlighted by Corey Geiger at the USDA Ag Outlook Forum, between 2011 and 2024:
- Milk components (butterfat & protein) increased by 27.2%.
- Total milk production grew by only 15.9%.
- Butterfat and protein pounds outpaced milk volume growth by 11.3%.
This component-driven growth is largely due to the rising demand for cheese, butter, and other high-value dairy products. Improvements in milk quality have boosted cheese yields, increasing efficiency and profitability across the dairy supply chain.
How Does India Compare?
1. Total Milk Production Still Dominates
India remains the world’s largest producer of milk, with an estimated annual production exceeding 220 million metric tons. However, unlike in the U.S., total volume remains the primary metric for industry growth, driven by domestic consumption and government policies aimed at self-sufficiency.
2. Liquid Milk vs. Value-Added Products
A key reason for this difference is consumer preference. In India, over 50% of dairy consumption is in the form of liquid milk, whereas in the U.S., liquid milk consumption has steadily declined in favour of cheese, butter, and yogurt. This structural difference means that Indian farmers still prioritize total yield over specific milk components.
3. Pricing Model: Fat & SNF vs. Butterfat & Protein
Indian milk pricing is based on fat and solids-not-fat (SNF) content, a system that encourages some focus on quality but still rewards volume. In contrast, the U.S. system increasingly rewards higher protein and butterfat yields, aligning with market demand for value-added dairy products.
4. The Buffalo Advantage
India has a unique strength in buffalo milk, which naturally contains higher fat (~6-7%) compared to cow’s milk (~3-4%). This is well-suited for traditional dairy products like ghee, khoya, and paneer. However, protein levels in Indian milk remain an area for improvement if the country seeks to expand its footprint in global dairy exports, particularly in high-protein segments like cheese and whey protein concentrate (WPC).
The Need for a Paradigm Shift in India
While total milk production remains important, India’s dairy sector must gradually shift towards a component-focused growth strategy for long-term sustainability and competitiveness. Some key steps include:
- Enhancing Breed Genetics – The U.S. has optimized Holstein and Jersey breeds for high protein and butterfat yields. India needs stronger selective breeding programs and crossbreeding strategies to improve protein content in indigenous and crossbred cattle.
- Optimizing Feed & Nutrition – Nutraceuticals are improving milk quality by reducing somatic cell counts, lowering antibiotic use, and increasing SNF and protein content. Such advancements need broader adoption across India.
- Shifting Industry Focus to Value-Added Dairy – India’s cheese, butter, and protein ingredient segments are growing, but still account for a smaller share compared to global dairy leaders. A policy shift that incentivizes milk component enhancement can accelerate this transition.
- Aligning with Export Market Requirements – To become a global dairy powerhouse, India must enhance protein yields and quality to cater to international markets that demand high-protein cheese, casein, and WPC.
Conclusion: Learning from the U.S., Adapting for India
While the U.S. dairy industry is prioritizing milk components over total production, India still measures growth primarily by volume. However, as consumer preferences evolve and global dairy exports become a bigger focus, India must begin shifting towards a quality and value-driven dairy model.
Although India’s volume growth in the past decades, leading to be the top milk producer in the world is commendable to say the least, the future of Indian dairy will not just be about how much milk is produced but how nutritious, protein-rich, and versatile it is for high-value applications. The U.S. model offers valuable insights, but India’s unique dairy landscape requires a tailored approach that leverages its buffalo milk advantage, local consumer demand, and growing export potential.
The shift from volume to value may be gradual, but it is inevitable. The question is – how soon will India embrace this transformation?
